Second District, Division One Sustains Denial of Fee Recovery Without Predicate Underpinnings for an Award.
The first step of any analysis for recovery of fees is to locate a statute or contractual clause authorizing their recovery. Without this, the American Rule will usually preclude any efforts to recoup incurred attorney’s fees in litigation. The next case depicts how this plays out in a real-life matter taken all the way through appeal.
Plaintiffs alleged that they purchased a "lemon" of a car that could not be repaired—not just once, but three times—by Ford and by certain Ford repair dealers. They eventually sued defendants for violations of the Song-Beverly Consumer Warranty Act and Magnuson-Moss Consumer Warranty Act, as well as for fraud and breach of oral contract. (None of these claims have fee-shifting features or clauses that would aid the defendants in this area.) Plaintiff was defensed (even though the jury found there was an oral contract, albeit one insufficiently clear for enforcement). One of the defendants moved to recover fees and costs totaling $104,284.08, claiming entitlement both by statute and by contract. The trial court denied the request, and losing defendant appealed.
The Second District, Division One—in a 3-0 opinion penned by Justice Rothschild—affirmed in VanSchaik v. Magic Acquisition Corp., Case No. B205209 (Nov. 25, 2008) (unpublished). The rationale: there was no predicate basis for defendant’s recovery of its fees.
The first claimed basis—the Automobile Sales Finance Act (ASFA), Civil Code section 2983.4—was not triggered because plaintiff’s action was not based on this statute and the oral contract was certainly not subject to ASFA. Even though they pled conduct that might have amounted to a breach of duties under ASFA, plaintiff did not seek relief under the statute such that these incidental averments were inconsequential. (See Brown v. West Covina Toyota, 26 Cal.App.4th 555, 563-564 (1994), disapproved on another ground in Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4th 985, 996 (1998).)
The second claimed basis—a written contract with a fees clause—failed because no such contract was in the appellate record and the feigned language (allowing defendant to recover fees for its "reasonable collection efforts") was not in play because plaintiff’s suit was not a collection action.
Lesson from this case: make sure you have a fee "anchor" before you seek to recover them from an opponent and, in the process, spend substantial resources trying to sustain the unsustainable before an appellate court.